Can Obama rein in college costs?

“My concern is that the rating system would put universities at a disadvantage if they prepare students for public service,” said Karen Haynes, president of the California State University San Marcos. / photo by Jamie Scott Lytle * U-T San Diego

“My concern is that the rating system would put universities at a disadvantage if they prepare students for public service,” said Karen Haynes, president of the California State University San Marcos. / photo by Jamie Scott Lytle * U-T San Diego

President Barack Obama’s proposal to create a ranking system for colleges based on how much value they provide to students is getting mixed reactions from some local higher-education officials.

The system, which could be in place by 2015, would rate colleges on the financial aid they provide, guarantees they offer about student debt, their graduation rates, the earnings of their graduates and other factors. The rankings would be developed by the U.S. Department of Education and could be used as a sort of consumer guide to help prospective students select schools.

If enacted, the rankings could by 2018 affect the amount of state funding, student loans and federal Pell grants for students with financial need.

At California State University San Marcos, President Karen Haynes said her campus would do well in some categories but might be penalized in areas such as graduates’ earnings, because many students there go on to teaching careers rather than higher-paying jobs in other fields.

“My concern is that the rating system would put universities at a disadvantage if they prepare students for public service,” she said. “It’s certainly part of our mission to, in fact, prepare for public-sector jobs.”

Haynes said Cal State San Marcos students graduate with an average debt of $13,000, lower than the average debt at other Cal State schools and also below the average debt of $29,000 for all public universities.

She also believes her campus would rank relatively well overall under Obama’s proposed rating system, which awards schools that reach out to low-income students. More than 41 percent of her university’s students are poised to become the first people in their families to graduate from college, and 45 percent are Pell Grant recipients, Haynes said.

Steve Pultz, assistant vice president for enrollment at the University of San Diego, expressed similar concerns regarding Obama’s intentions.

“The devil is always in the details,” he said about the proposal.

Obama’s plan is in part a response to the skyrocketing cost of attending college.

In analyzing data from the U.S. Department of Labor, the financial news service Bloomberg showed that college tuition and fees have shot up by 538 percent between 1985 and this past July. During the same time, medical costs have increased by 286 percent and the Consumer Price Index has gone up by 121 percent, according to Bloomberg.

Explanations for the soaring cost of college and how to curtail it vary.

In a 2010 report, the conservative Goldwater Institute blamed administrative bloat as the underpinning reason.

Other groups and researchers have also said colleges pay lavish salaries to campus leaders and certain professors in an endless bid to gain prestige.

Author and university economics teacher Richard Vedder pinned the increase largely on excessive compensation and expenses for administrators, along with alumni donations and government subsidies — two forms of financial support that to him enable higher-education officials to place little emphasis on boosting efficiency and reining in various campus costs.

At the University of San Diego, Vice Provost Thomas Herrinton sees myriad reasons, including reduced state funding, increased payments toward student assistance and demands for the latest technology.

While businesses can effect costs with productivity gains, such changes are difficult in education, Herrinton said.

“We had 35 students in a class 30 years ago, and we still have 35 in a class today,” he said. “There’s been no change in productivity.” Herrinton noted that some colleges are trying to boost their student population in an economical way with MOOCs — massive open online courses.

Some colleges have increased the amount of money they devote to student aid, but that in turn takes away money for other parts of the institution and ultimately leads to higher tuition and fees overall.

Pultz said the tuition discount rate at USD is about 40 percent, matching the national average for providing student aid. Ten years ago, it was 32 percent.

And Herrinton said constant demand to keep up with advancing technology has led to big-ticket purchases that contribute to rising tuition and fees. “We need to meet that demand, and we do,” he said. “Whereas technology in many areas has decreased costs, it’s increased cost in our field.”

Finally, Herrinton said more of a college’s budget goes toward personnel than in a typical industry — and along with that difference are medical insurance and pensions, which have also experienced significant growth in expenses over the years.

At Cal State San Marcos, Haynes said public universities in California have faced the additional burden of lower state funding in recent years while they are required to achieve often-expensive compliance with government regulations that call for everything from more audits to greater financial-aid reporting.

She and Herrinton said in general, they understand the Obama administration’s attention to rising college costs.

“I think the concept is a good one,” Herrinton said. “We need to address the cost, affordability and outcomes.”

Herrinton said he believes USD would do well in most categories in the proposed rating system. The school’s four-year graduation rate is 60 percent, better than the national six-year rate of 58 percent, he said. About 79 percent of USD students are employed after graduating, he said.

Herrinton said the cost of attending USD could be a negative factor under the president’s ranking system, because tuition alone is $40,900 a year and the total estimated cost for one year of education there is $58,189. He said those figures are high partly because all classes are taught by faculty members, with no graduate students in that capacity.

Pultz also said costs and affordability are real issues that should be addressed, but as a whole, he’s not sold on the president’s strategy.

“Whether or not the federal government needs to be the one stepping in to do something about it, I’m not sure,” he said.

Chris Ordway, a college planning adviser who runs the San Diego-based nonprofit HEFAR Group (Higher Education Financial Aid Resources), said parents need all the help they can get figuring out the affordability of college.

Ordway said many parents don’t know, for example, that Stanford can be more affordable than San Diego State University because the private university’s huge endowment covers more expenses for families.

Still, Ordway said he’s not sure the government can pull off this tall order of reining in the cost of a higher education.

“I am definitely skeptical,” he said. “It’s a great idea, in theory. In real life, it could be more confusing.”